BNN takes a look at the FX reaction to the French and German agreement to help Greece finance its debt, with additional aid from the IMF, with Sebastien Galy, senior currency strategist, BNP Paribas, worth a quick watch, just click on BNN, above.

The plan, which would appear to be driven by the French and German governments has three pillars to it:

1. Bi-lateral aid from the EU states for Greece if absolutely needed, and help from the International Monetary Fund.

2. Financing should be at the market rate, easier for Greece, plus clean up the balance sheet etc.

3. Review of the monitoring of the fiscal side within Europe

4. Belt tightening and near term pain across the union.

Originally the EU states were not to fund other states, so rule changes within the EU are now be required, lots of negotiation still to be done.

One of Doug Casey's saying is that “if it is falling, push it” and Jim Rogers, who said the other day that it would be better to eject Greece as that would show that the EU means business and then the Euro would strengthen, he added that it would be good for all concerned.

However, where would it stop, there appears to be 5-6 countries in the same sort of mess that Greece is in, so they could be picked off one at a time if the Union were to eject Greece, which is not going to happen.

This looks set to run and run, so the Euro could come under more selling pressure and thus more upward pressure on the US Dollar, possibly capping golds progress, we shall see.

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The New York Times:

BRUSSELS — After months of fractious debate, the 16 countries that use the euro agreed on a financial safety net for Greece, combining bilateral loans from those European nations with cash from the International Monetary Fund.

The proposal, brokered by France and Germany and then approved by European leaders on Thursday, would take effect if the Greek government were unable to borrow in the commercial markets. Under the deal, loans would be provided at market rates and offered only with the agreement of all the nations that use the euro currency.

“All member states of the euro zone declared that they are prepared to participate,” Herman Van Rompuy, president of the European Council, said at a news conference late Thursday.

President Nicolas Sarkozy of France described the decision as a “success for the countries of the euro zone.”

The accord actually represents a partial retreat for several countries, including France, as well as the European Central Bank, which had initially rejected the idea of the I.M.F.’s taking part in any bailout in the euro zone. Still, the agreement represents a breakthrough because Germany has been resisting pressure to give details on how Greece could be rescued if necessary.

Greece had been desperate for a statement, backed by Germany, that explained how a default would be avoided; it hopes the accord will reduce the high interest rates Athens is being forced to pay as it faces deadlines this year on 54 billion euros ($72 billion) of debt. Greece’s prime minister, George Papandreou, described the deal as “very satisfactory.”